The World Bank Social Insurance Administration Project (P170343) REPORT NO.: RES52442 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SOCIAL INSURANCE ADMINISTRATION PROJECT APPROVED ON FEBRUARY 6, 2020 TO NORTH MACEDONIA SOCIAL PROTECTION AND JOBS EUROPE AND CENTRAL ASIA Regional Vice President: Anna M. Bjerde Country Director: Xiaoqing Yu Regional Director: Fadia M. Saadah Practice Manager/Manager: Cem Mete Task Team Leader(s): Zoran Anusic The World Bank Social Insurance Administration Project (P170343) ABBREVIATIONS AND ACRONYMS AVRM Agencija za Vrabotuvanje (Employment Agency of North Macedonia) CBMIS Cash Benefits Management Information System CCT Conditional Cash Transfer CCTP Conditional Cash Transfer Project CDCCU Central Disability Certification Coordination Unit CPF Country Partnership Framework CPS Country Partnership Strategy DEF Disability Employment Fund ESP Extended Service Period EU European Union FM Financial Management FZO Fond za Zdravstveno Osiguruvanje (Health Insurance Fund of North Macedonia) GoNM Government of North Macedonia GRM Grievance Redress Mechanism HBS Household Budget Survey IFR Interim Financial Report M&E Monitoring and Evaluation MAPAS Agencija za Supervizija na Kapitalno Finansirano Penzisko Osiguruvanje (Agency for Supervision of Fully Funded Pension Insurance of North Macedonia) MLSP Ministry of Labor and Social Policy MoH Ministry of Health MoF Ministry of Finance NBRNM National Bank of the Republic of North Macedonia PDO Project Development Objective PIOM Fond na Penziskoto i Invalidskoto Osiguruvanje (Pension and Disability Insurance Fund of North Macedonia) PMU Project Management Unit POM Project Operational Manual SIAP Social Insurance Administration Project SURS Single Unified Registry System UJP Uprava za Javni Prihodi (Public Revenue Office of North Macedonia) The World Bank Social Insurance Administration Project (P170343) BASIC DATA Product Information Project ID Financing Instrument P170343 Investment Project Financing Environmental and Social Risk Classification (ESRC) Low Approval Date Current Closing Date 06-Feb-2020 30-Apr-2023 Organizations Borrower Responsible Agency North Macedonia Project Development Objective (PDO) Original PDO Improve the quality of services in administering social insurance and strengthen the regulatory framework for people with disabilities and hazardous occupations. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-90360 06-Feb-2020 12-Feb-2020 02-Mar-2020 30-Apr-2023 15.17 1.95 13.13 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Social Insurance Administration Project (P170343) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status (a) Key findings, results, and actions required by counterparts and the Bank 1. Within two years of implementation and one year remaining until the original closing date, the Project still has a way to go towards the results agreed at the time of approval. Two factors have largely affected the project implementation status. First, the project design, otherwise robust, contained five technically complex and politically difficult reforms that were optimistically planned within a short period of time. The original project duration – three years – would be possible only under a perfectly-conducive enabling environment and operational circumstances.1 Second, the first half of the project's implementation period has been affected by external factors, most notably the COVID-19 crisis, which delayed the launching of analytical and preparation activities and their procurement processes, while reducing the capacity of the counterpart agencies to support technical activities. As a consequence of the slower- than-anticipated implementation progress and noting the risk of not achieving the project’s development objectives, the April 2022 implementation support mission and the May 2022 Midterm Review Mission rated progress towards the project development objectives and implementation progress, as well as the two main components, as Moderately Unsatisfactory (MU). However, key preliminary activities have already been launched in all project components, and the project has a good chance of meeting its PDO, if given more time. Based on the projected time needed to complete all activities, a revised project implementation plan was proposed by the Government and the World Bank teams. (b) Assessment of implementation progress by components Component 1 (Improving the quality of the social insurance administration services) 2. Design of Single Unified Registry System (SURS). Between March and May 2022, the consultants delivered a set of reports including i) SURS Agency Design, defining the detailed internal organizational and operational concept of the Agency, ii) SURS Transition Plan, designing and scheduling a plan to migrate from the current largely dispersed system to an integrated registration and data warehousing system without disturbance to the process, iii) Skills and Knowledge Transfer Plan, focusing on the HR component of the system unification and centralization, and iv) first draft of the SURS Business operating system, covering several operational elements of the new SURS Agency including business processes, workflows, information flows and modules, data and communications channels, and others. 3. A SURS legislation is to be drafted. A SURS ICT management resource document was prepared, detailing the organizational structure of the ICT department, description of the SURS, a plan for data migration to 1 The list of supported reforms includes i) central unified social insurance registration; ii) central disability certification procedure and unified disability certification methodology for all users and beneficiaries; iii) effective inclusion of persons with disabilities into the labor market; iv) modernization of Pension and Disability Insurance Fund's (PIONM) capacity and business processes; and v) reform of early retirement of hazardous and arduous occupations. The role of SIAP ranges from reform design to establishing the required administrative framework for implementation. In previous projects some of these reforms have required a period of five or more years for implementation. The World Bank Social Insurance Administration Project (P170343) the new database, including formal protocols and procedures. Elements of this document are to be included in the technical specifications for procurement of the SURS system. The bids for a local consultant for drafting of SURS legislation are under evaluation. The work is expected to commence in October 2022 and be completed in April 2023. 4. Further activities to develop SURS would require a project extension. According to the revised project implementation plan, the development of SURS implementation (both software and supplementary legislative framework) is scheduled to be announced in November 2022, start in April 2023, and complete by October 2024. Procurement of IT equipment, furniture, training and adjustment of software and processes in the participating institutions is panned to be announced in early 2023 and be implemented by mid-2024, in sync with the software development process. By end 2024 it is expected that SURS will be established and be fully operational. A process of initially parallel functioning of the old and new registration systems in order not to jeopardize system operations would be gradually phased out. 5. Consolidation of PIONM’S database of historical earnings of insured individuals (M4). Between May and August 2022, key reports have been delivered within this activity: i) a Summary report overviewing the size, structure, and time distribution of the "missing M4 forms" (M4 annual form, submitted by employer to PIONM, reports the pensionable base and pension contribution liability for insured individual), defining and analyzing possible options for generating missing M4 forms and assessing the fiscal impact of each option, and ii) First draft of the law governing pensionable service and payment of unpaid contributions for pension and disability insurance ("missing M4 Law") for the period of 1970-2005. Information on the situation with missing M4 reports of insured persons with policy options and a recommendation has been submitted to the Government. Following the Government's decision, expected in early October 2022, the consultant will finalize the draft law and prepare a technical specification for implementing the proposed solution for resolving the "missing M4s", by the end of 2022. The development of the software solution is planned to be realized during 2023 (a period of 12 months), which would require an extension of the implementation period of the SIAP project. 6. A contract was concluded with a company for Functional Analysis of PIONM and modernization of its business processes. According to the TOR and the scope of work, this activity is expected to be completed in Q2/2023 and provide a basis for the following activities related to the development and adjustment of PIONM's software and procurement of IT equipment. Implementing the required follow-up activities detected in the Analysis would require project extension. Assuming the project is extended, the activities would start in the second half of 2023 and finalize in the second half of 2024. 7. Strengthening the actuarial capacities of PIONM is scheduled to start in October 2022. Trainings in the PIONM's department in charge of actuarial analysis will not require complex procurement procedures. The staffing of the Department and its Work Program are under preparation in the PIONM. The Program is expected to provide a learning plan to be realized over the next two years. Supporting it would necessarily require an extension of the implementation period of the SIAP project. The World Bank Social Insurance Administration Project (P170343) Component 2 (Strengthening the regulatory framework for persons with disabilities and for hazardous occupations) 8. The design for Establishing the Central Disability Certification Coordination Unit (CDCCU) is under development. The CDCCU Design Report is currently under review and discussion with stakeholders. After a desired organizational option of the CDCCU is selected, the activity will proceed with drafting detailed specification for implementation and capacity building and drafting the legal framework, which is expected to be completed by November 2022. Regarding parallel activities, an international consultant was hired in July 2022 to work on designing the National Registry of Persons with Disabilities, with deliverables expected to be prepared by January 2023. Design of the new disability assessment methodology is another important building block of the CDCCU. Bids for its development are under evaluation. 9. Implementation activities for the CDCCU would require additional time. According to the revised implementation plan, current activities including development of the CDCCU design, assessment methodology, and legislative framework should lead into the software development (March 2023 - May 2024), procurement of equipment for CDCCU (July 2023- April 2024), licensing of the disability assessment officers, staffing and training of CDCCU staff (September 2023 - October 2024), and adjustment of business processes of other agencies utilizing disability assessments to the new CDCCU structure (June 2023 - December 2024). Like in the case of SURS, a timebound parallel functioning of selected administrative CDCCU processes (i.e., applying for disability assessment) is envisaged to guarantee the functioning of the system, while minimizing possible disruptions to final users. 10. Improving the system of employment of persons with disabilities and legislative and regulatory framework for employment of persons with disabilities has reached its final stage. The reports prepared under this activity analyzed the current system of employment of persons with disabilities in North Macedonia, described international experiences, proposed the model for phased implementation of a quota system for employment of persons with disabilities in North Macedonia with fiscal implications and transition strategy. The draft Law on the Employment and rehabilitation of Persons with Disabilities and the New Quota Model was presented to the Economic Council of the Government (which includes representatives of the employers and employees) and discussed with the stakeholders. Initial positive feedback by most interested parties encouraged the Government to move further on seemingly open window of opportunity. The draft Law on Employment of Persons with Disabilities envisages the establishment of four regional professional rehabilitation centers (REHA Centers), two of which (in Topansko Pole (Skopje) and in Strumica) have already been operating as a pilot. The timely establishment of the remaining REHA centers for persons with disabilities is vital to achieve the objective of increasing the employment of persons with disabilities.2 The teams held several meetings on this topic and agreed 2 According to the current situation in North Macedonia, there is no legal, formal and institutional set-up of REHA centers. In practice, two REHA centers have been piloted, first in Topansko Pole (Skopje) in cooperation with UNDP and Swiss Development Agency and second in Strumica which was envisaged to be financed from the central budget. Pilot in Topansko Pole was completed but resulted in insufficiently developed capacity, equipment and trained staff to provide appropriate services and responsibilities that would be The World Bank Social Insurance Administration Project (P170343) that SIAP would contribute to the outcome by supporting the physical establishment of the legislated REHA Centers and training REHA staff, without engaging in the provision of rehabilitation services, either own or outsourced. Additional activities related to REHA Centers would include internal renovation, procurement of IT equipment, office equipment, and training for staff of four REHA centers (including the two pilots and two to be established) and be implemented during 2023-2024, in parallel with establishment of the CDCCU and the National Register for Persons with Disabilities. As a result, the new model and a law on employment and rehabilitation of persons with disabilities would become fully operational and functional in 2024. The additional engagement in REHA Centers would require EUR 1.4 million which would be compensated by already envisaged budgetary savings in the ongoing activities (details in section II.C).3 12. The revision of the list of hazardous occupations eligible for early retirement with Extended Service Period (ESP) has been in progress. As of August 2022, the first set of reports including the: i) Analysis and adaptation of the existing methodology of hazardous occupation for early retirement; ii) Methodology for assessment of hazardous occupation for early retirement in North Macedonia, and iii) the Rulebook (with guidelines and methodology) assess hazardous occupations eligible for early retirement in North Macedonia were delivered. Due to initial slowdowns of the consultants' work and several revisions of deliverables, the initial deadline of the assessment completion has been extended from December 2022 to the first half of 2023. The analysis results will be used to develop a Proposal for reform of the system of early retirement for jobs that are classified as hazardous. Given the expected long process of policy discussions with the stakeholders, this final activity would require additional time. Assuming the assessment is completed as planned (by mid-2023), the teams expect that the policy proposal would be completed in the second half of 2024. 13. Based on the review of the timetables and budget for the remaining activities, and in consideration of a possible extension of the project’s closing date, the teams prepared a revised procurement plan that does not envisage any change in the loan amount. (c) Project Management and M&E 14. Overall Project Management. The PMU is fully staffed and shows a high commitment to the project and its management. Despite the severe impact of the COVID-19 pandemic on project implementation, the PMU has been able to launch initial activities and reduce the delays by merging interrelated activities in the design of SURS and CDCCU in the second year of project implementation. Both design activities are currently in progress. The capacity of the PMU to monitor the project progress is adequate. 15. Disbursement. Over the past two years of project implementation, only 7% of the project funds has been disbursed. Expected disbursements in FY2023 stand around EUR 2.3 million (USD 2.52 million), with EUR imposed by the new legal solution for employment of persons with disabilities. Pilot in Strumica started but did not develop beyond its first phase. 3The contracts for SURS design, CDCCU design and revision of the list of hazardous and arduous occupations have been signed below the expected budget for the corresponding amount. The World Bank Social Insurance Administration Project (P170343) 800 thousand expected in the first half of FY2023 and EUR 1.5 million in the second half of FY2023. Table 1 lists the activities that need to be implemented or launched in FY2023 with their corresponding payments expected in FY2023 and first half of FY2024. Since the government budget revision for CY2022 allocated only a small portion of funds requested for SIAP, additional payments expected by end 2022 will be reallocated from other items or executed in 2023. Assuming the project closing date is extended until December 2024, the expected revised disbursement schedule in US Dollars is shown in section III (SUMMARY OF CHANGES/Disbursement Estimates). FY2024 and FY2025 are the years of final implementation activities following the design phase and activities expected to be realized in FY2023, and cluster the project disbursements, estimated at USD 8.0 million in FY2024 and USD 3.6 million in FY2025. Table 1: Activities' financial schedule in FY2023 and planned disbursement 16. Procurement. Based on current execution of procurement activities, the corresponding rating remains Satisfactory. The PMU continues to manage the project, including procurement in a professional, efficient, and diligent manner. Procurement is implemented in line with the agreed procurement arrangements for the Project and according to the procurement plan. There were no delays or major issues during the procurement processes and contracts’ implementation which took place after the The World Bank Social Insurance Administration Project (P170343) previous two supervision missions. The Procurement plan was updated regularly to meet and reflect project needs, and tentatively revised in line with project extension of 20 months. 17. Financial management (FM). The FM arrangements of the project including budgeting, accounting, internal controls, the flow of funds, financial reporting, and external audit, were assessed to be Satisfactory. The project remains in compliance with FM legal covenants. Appropriate FM arrangements are in place and acceptable quarterly IFRs are submitted to the Bank on time. There are no outstanding audits or audit issues. (d) Environmental and Social Standards (ESSs), Citizens Engagement (CE), and Grievance Redress Mechanism (GRM) 18. The Project prepared a CE mechanism for dialogue with all stakeholders relevant to the project and a GRM for the phase of Project's intensified visibility. Over two years of implementation, the Project focused on engaging the stakeholders in all stages of activity preparation and implementation. Within Component 1, one workshop, seven meetings, and permanent data exchange and email communication were conducted on the SURS design and PIONM business processes modernization activities. Within Component 2, the stakeholders' engagement was very intensive in the area of employment of persons with disabilities. Five presentations and roundtables were organized with broad list of stakeholders including the associations of disabled individuals, sheltered companies, employers, trade unions, and public agencies. In the phase of preparation of the model and law for employment of persons with disabilities, a questionnaire was submitted to all stakeholders involved in the public presentation seeking comments on the current model of employment of persons with disabilities and inputs on possible future approaches. Proposals from protected companies, NGOs, centers for social care related to several design and technical aspects of implementation of the model and law were considered. For the design of CDCCU and revision of the hazardous and arduous occupations list, meetings were held with the relevant public agencies. Comments and suggestions received were incorporated while drafting the documents. A public outreach campaign will be organized after the SURS design and establishment of the CDCCU are completed. A functional GRM has been established and expected to be used mostly for the SURS, once it starts to be tested. 19. The SIAP Project does not entail environmental risks. As envisaged under the ESCP, the PMU will ensure that technical specifications for the equipment to be purchased under the project meet environmental safety requirements and the assessment of hazardous workplaces is undertaken with consideration of the World Bank Environmental, Health, and Safety Standards (EHSGs) and Good Industry International Practice (GIIP). The PMU has maintained the capacity and mechanisms for effective implementation of safeguards. ES NOTE TABLE B. Rationale for Restructuring 20. The Project’s PDO remains achievable within the extended project closing date as suggested by this restructuring. The performance of the Borrower and the implementing agency remains satisfactory, and the Bank and the Borrower agree on actions that will be undertaken by the Borrower and implementing The World Bank Social Insurance Administration Project (P170343) agency to complete the Project. Consequently, the DO rating can be upgraded as soon as the restructuring is approved, while the IP rating is expected to be upgraded by Q3 FY2023 provided the revised action plan agreed by the Government (details below) is adhered to, and major milestones defined thereby achieved. 21. The commitment by the Government of North Macedonia to all reforms supported by SIAP remains strong. The MLSP and other counterpart agencies involved in the Project have confirmed their intention to complete the project activities leading to a swift adoption by the Government of new laws within the next 6-12 months depending on the reform. On July 5, 2022, the Government submitted to the World Bank a formal request to extend the project until December 31, 2024, and to restructure some of its elements in order to ensure meeting the planned development objectives. The implementation of project activities can proceed without prior adoption of the key laws because their implementation is legally enabled and supported by the legislative act that approves the loan for the SIAP project. Table 2 summarizes the status of key legislative acts, expected timetable of their adoption and entry in force and implication of implementation of project activities. Table 2: Status and plan of adoption of key legislative acts and implications on project implementation Status Planned adoption and Implication on project implementation entry in force Law on SURS In the process of Adoption planned in SURS activities can proceed regardless of the drafting H2 2023 with entry in SURS Law. Implementation is legally supported force January 2024 by the Law on borrowing for the SIAP project. Law and Not started yet. Adoption planned in CDCCU activities can proceed regardless of the bylaws on Drafting H2 2023 with entry in CDCCU Law. Implementation is legally CDCCU planned in H1 force January 2024 supported by the Law on borrowing for the 2023. SIAP project. Law on Drafted and Adoption during 2023, REHA activities can start prior to enactment of Employment of discussed with entry in force January the Law on the basis of future Government Persons with stakeholders 2024 decision on remaining three REHA center Disabilities locations, expected to be issued prior to commencement of envisaged activities. 22. The implementing agency’s Midterm Project Progress Report summarized the progress in implementing activities by components, discussed the open issues, provided an updated implementation calendar by component, and proposed next steps. The report confirmed the client's intention to proceed with implementing the Project as initially designed, but within a revised timeframe allowing more time for the complex reforms and taking into account the external delaying factors like COVID-19. Moreover, the report identified the need to supplement the Project's support to employment of persons with The World Bank Social Insurance Administration Project (P170343) disabilities with the establishment of the rehabilitation centers for persons with disabilities, as envisaged by the draft legislation. This activity will be financed from the current project envelope. The MTR proposed a revised implementation timetable for all activities within the assumption for an extension of the closing date by 20 months (i.e., by December 31, 2024) to deliver the expected outputs and meet the planned objectives. In line with that, the PMU prepared a draft revised Procurement Plan and Disbursement Plan. 23. The Project Development Objectives (PDO) of the SIAP would remain unchanged. Three out of four PDO indicators would remain unchanged, while the measurement concept and unit for the fourth one would be more narrowly defined. Several intermediate indicators would be amended, removed, or added due to either conceptual or technical issues (see II. DESCRIPTION OF PROPOSED CHANGES for details). It is expected that the PDO rating can be upgraded as soon as the extension of the closing date is approved. 24. Therefore, this restructuring will i) extend the project closing date to December 31, 2024; ii) within the current project budget, revise Component 2 to add an activity under to enable the future implementation of the Law for Employment of Persons with Disabilities through early development of REHA centers; create a new disbursement category for Part 2.4. of the Project, which accommodates the REHA centers activities. II. DESCRIPTION OF PROPOSED CHANGES A. Extension of the Project Closing Date 25. Extension of the Project Closing Date from April 30, 2023, to December 31, 2024. B. Revisions to the Results Framework 26. The proposed revisions to the project results indicators are as follows: - Narrow down the scope of the PDO indicator for unifying the disability assessment process to cohorts below 26 years. According to the revised implementation plan, the CDCCU would become operational in the last year of the (extended) project and effectively unify the disability assessments according to new functionality-based methodology in the next phase. The current disability assessment for youth below 26 is already performed under the functional methodology and for this age group, given the advanced starting point, the CDCCU would in the first phase also manage to unify the disability assessment processes. - For the same reason, rely on data on disability certifications for youth below the age of 26 in measuring the PDO Indicator registering average time to issue a disability certificate. For other disability groups the reduction of the average time to issue a disability certificate would be recorded in the first years of implementation of the CDCCU, i.e., from 2025 onwards. The World Bank Social Insurance Administration Project (P170343) - Clarify and update the intermediate indicator "Proportion of individual pension service and earnings records in PIONM that are consolidated". This indicator measures the progress in consolidating the archive of "missing M4" forms in individual work histories. As the initial value of 50% shows, there are many records with some missing data issues. While the end target of 95% consolidated records remains unchanged, the intermediate targets of this indicator have been removed. According to preliminary M4 Consolidation Report, the database consolidation could not go in waves but in one-time operation following the provisions in the Law on Service Period Consolidation (the "M4 Law"). - Delete intermediate indicator "Public awareness on employment of persons with disabilities raised" due to inconsistency. This indicator was designed to measure the outreach of the Central National Registry of Persons with Disabilities by number of inquiries through various means of communication (including e-inquiries, phone calls, and emails). Another intermediate indicator, however, measures the effectiveness of establishing the Registry with end target of "Registry fully functional and operational". As the inquiries to Registry cannot be monitored prior to its full functionality, the indicator was deleted. - Update the intermediary targets for Component 2 indicators for unified disability assessment methodology and CDCCU with expected process of developing and enacting the related legal frameworks. - Delete the intermediary indicator "Percentage of persons who had check-ups as part of their disability assessments, out of those who were issued disability certificates during the previous month". The indicator was designed to monitor the increase the number of check-ups, particularly the applicants for third-party care, that would result from freeing the resources of the unified disability assessment process. As such results could be achieved only with operational CDCCU and operating period showing the performance, this initially overoptimistically set indicator was deleted. - Delete the intermediary indicator "Percentage of persons assessed outside Skopje (out of those residing outside Skopje), who were issued disability certificates or formal rejection decisions in the previous month" for the same reason as previous. The goal was to measure the decentralization of disability assessment countrywide, but that would be observed only few years after the CDCCU's regional structure becomes operational. As this is envisaged by the end of the (extended) project, this indicator was deleted. - Add the indicator "Centers for professional rehabilitation of persons with disabilities" that monitors strengthening of the system supporting the employment of persons with disabilities in line with the law that has been under preparation with the project component. The Law envisages four rehabilitation centers in North Macedonia, of which one in Topansko Pole (Skopje) has already been in operation. The project will support equipment and setting in operation remaining three rehabilitation centers without engaging in supporting their rehabilitation programs, own or outsourced. 27. The revised and proposed Results Matrix is presented in Section IV, Results Framework. The World Bank Social Insurance Administration Project (P170343) C. Revised Components and Costs 28. The project design with three components remains unchanged. However, an activity is added to Component 2 to enable the future implementation of the Law for employment of persons with disabilities through faster development of rehabilitation centers for persons with disabilities. The estimated total cost of the activity is EUR 1.4 million. The activity will be financed from savings from original activities in both component 1 and 2, with an estimated EUR 1 million from the new activities to be financed from component 2 savings, and EUR 0.4 million – from component 1 savings. Savings realized until August 2022 would release sufficient budget to finance the establishment of REHA centers, and include: Table 3: Savings by Component Revised budget and Activity Initial budget (EUR) Savings (EUR) Realized contract (EUR) 1.1.3 SURS Design 800,000 185,050 614,950 2.1 Development of 2,450,000 1,600,000 850,000 CDCCU 2.3 Revision of the list of 800,000 650,000 150,000 hazardous occupations Total 4,050,000 2,435,050 1,614,950 29. The project will support internal renovation and equipment of the centers as well as develop business standards and training programs for the REHA center staff. The REHA centers are envisaged in the Draft Law on Employment of Persons with Disabilities as organizations with adequate human resources responsible for implementation and coordination of professional rehabilitation services on regional level. Teams formed at REHA centers will be composed of relevant employed experts able to assess the local needs / capabilities of the persons with disabilities for work and employment and to assess the needs of local education institutions, social welfare centers, institutions for persons with disabilities, employment agencies, local communities, and local employers. The Project would support development of REHA centers by providing equipment and internal renovation and technical assistance to prepare adequate procedures and training programs for the center staff to bring them up to operational status (details in Table 4). In order to establish rehabilitation capacities in the shortest possible time, REHA The World Bank Social Insurance Administration Project (P170343) development activities may start prior to enactment of the Law on Employment of Persons with Disabilities, based on Government Decision on three REHA locations. Internal renovations of REHA centers and other activities will not trigger related ESF requirements. The Project will not engage in REHA Centers' program development or program delivery. It should be noted, however, that the project will not disburse against expenditures for the REHA centers activities, under Category (2) of the loan, until GoNM has updated the POM in form and substance acceptable to the Bank to include the criteria and procedures for the identification and selection of REHA Centers based on the Borrower’s applicable legal framework establishing REHA Centers and defining their location. Table 4: Costing of the New Activities 2.2.4 Support to capacity building of the REHA Centers EUR 2.2.4.1 Internal office renovation for establishing of 4 REHA centers 600,000.00 Procurement of office equipment of offices for establishing of 4 REHA 2.2.4.2 350,000.00 centers 2.2.4.3 Procurement of IT equipment of offices for establishing of 4 REHA centers 300,000.00 TA for development of standards and procedures for rehabilitation of PWD 2.2.4.4 150,000.00 and training of AVRM and REHA centers employees TOTAL 1,400,000.00 30. Potential launch of REHA activities ahead of enactment of the Law on Employment of Persons with Disabilities would support primarily the capacity building within the legislative framework. The title of Component 2 (Strengthening the regulatory framework for persons with disabilities and for hazardous occupations) is thus proposed to be amended to (Strengthening the regulatory and institutional framework for persons with disabilities and hazardous occupations). D. Revisions to the Implementation Schedule 31. The following flowcharts visualize the revisions to the project implementation schedule for the different project components/activities. The World Bank Social Insurance Administration Project (P170343) (i) SURS Revised Implementation Flowchart SURS design Activity 1.1.3 2023 second half is ongoing, Software solution TORs preparation, Expected for SURS 2024 end October TOR to be published for development and implementation 2022 software solution data clean up / 12/2024  Equipment development and data period of 20 Established Final procurement clean up 11/2022 months- 12/2024 and deliverable (hardware and software operational Technical other) developed and SURS Specification entered data for  Office renovation Agency for software social insured (equipped solution for  Adjustment of people and HR SURS institutions hired) development software TOR to be published for Law and by-laws/  Employments for Law for SURS 06 /2022 Law to be adopted SURS Agency during 2023, to be and trainings in force from 2024 32. The last delivery of the company that was hired for the design of SURS is the preparation of a technical specification for the development of the software solution for SURS agency. This technical specification will be part of the TOR and call planned for November 2022. With this call, it is planned that the same company will clean up the data of the insured persons from the existing institutions (Pension fund, Health Fund, Employment Agency, and MAPAS) which are necessary for filling the register (SURS). Considering that we are talking about changeable data of insured persons (around 1.5 million) that should be updated daily (to the date of functioning of the SURS agency), the development of the software itself and data cleanup is planned for a period of 20 months, i.e., during 2023 and 2024. 33. In parallel, in the same period, it is planned to ensure the availability of the needed capacities of the SURS agency (physical space, technical and human capacity) and to adjust the software of all institutions that will exchange data with SURS on a daily basis, which is realistically expected at the end of 2024, i.e., January 2025 for the SURS agency to be fully functional. 34. All these activities are planned to be realized within the framework of the SIAP project and their realization can proceed without the prior adoption of the Law on SURS, because their realization is legally enabled and supported by the legislative act that approves the loan for the SIAP project. The legal solution for SURS is scheduled to be prepared by the end of 2022 (an evaluation of a consultant for its preparation is ongoing). The law is a condition only for the legal establishment and starting the work of The World Bank Social Insurance Administration Project (P170343) the SURS agency, which leaves room for its formal adoption in the next two years if the complex situation in the parliament remains unchanged. For e detailed list of activities please see Table 5. Table 5: List of Activities on SURS Design The World Bank Social Insurance Administration Project (P170343) (ii) CDCCU Revised Implementation Flowchart 2023 second half TORs preparation CDCU design 2024 CDCCU implementation Activity (2.1.1) TOR to be published for is ongoing, software solution software  Equipment development 12/2022 developed with procurement Expected end година module for (hardware, November National furniture, 2022 Registry of PwD vehicles) period of 18 Final Ongoing design of months- 09/2024  Office renovation deliverable End of 2024 National Registry of PwD Software Technical  Adjustment of Established and 11/2022 developed Specification institutions operational for software software CDCCU solution for CDCCU  Employments for Methodology for development CDCCU Agency disability (module for and trainings assessment and National licensed experts Methodology for Registry) TOR to be published for for disability disability assessment Training and development of the assessment to be prepared 10 licensing of experts methodology for months 07/2023 disability assessment for disability Law for assessment (2.1.9) establishment (2.1.3.4) 06/2022 during last Q of of CDCCU 2023 and 2024 Law and by- laws- to be creating pool of adopted during experts 2023, to be in force from 2024 35. The final deliverable of the company engaged for design of the CDCCU is preparation of a technical specification for development of the software solution for Central disability certification coordination unit, including the National registry of persons with disabilities. This technical specification will be part of the TOR and call planned for December 2022. This activity is planned to be realized in a period of 18 months, taking into account the functionalities that should be provided by the software solution. 36. During July 2022, ToR for the development of a national methodology for disability assessment was published, currently the evaluation of the received bids is ongoing. This activity, which will create a Unified Assessment Methodology, is necessary for the functionality of the disability assessment commissions, and the functionality of the CDCCU. After the development of this methodology, the same company should traine the first group of experts, who would be licensed and who are planned to be The World Bank Social Insurance Administration Project (P170343) trainers of other groups of experts in the future. In this context, the work with the consultant for the design of the National Register of Persons with Disabilities has been started and it is expected to be completed by the end of the year. 37. In parallel, during the 2023 and 2024, it is planned to ensure the capacities of CDCCU (spatial, technical and human), so it is realistically expected that in the last quarter of 2024, CDCCU and the new disability assessment system will be fully functional. All these activities are planned to be realized within the framework of the SIAP project and their realization can proceed without prior adoption of the Law on CDCCU, because their realization is legally supported by the Law on borrowing for the SIAP project. 38. The engaged CDCCU design company is expected to submit the Draft Legal Solution for CDCCU by the end of September and finalize it by the end of 2022. The formal adoption of a legal solution in a parliamentary procedure is a condition only for the CDCCU to be functional, which leaves room for its adoption in the next two years if the complex situation in the parliament remains unchanged. 39. Table 6 below shows the planned activities for CDCU under the restructured SIAP. Table 6: List of Activities on CDCU Design The World Bank Social Insurance Administration Project (P170343) The World Bank Social Insurance Administration Project (P170343) (iii) Revised Implementation Flowchart for Strengthening the Framework for Employment of Persons with Disabilities Law for employment Establishment of and TOR to be published for 4 REHA Centers rehabilitation reconstruction and 01/2024  2024 Established of persons equipment of 4 REHA institutional with Centers H1 /2023 framework disability with HR Hiring and  implementation of proposal to trainings regarding the New Law for introduce a rehabilitation process employment and new quota TOR to be published for of PwD for employees rehabilitation of model trainings H1/2023 in ESA and REHA PwD prepared Centers during 2023/2024 Law and by-laws to be adopted during 2022/ 2023, to be in force from 2024 40. The Law for Employment and rehabilitation of Persons with Disabilities with the by-laws are prepared. On July 8, 2022, the Law was presented to the Economic Council of the Government in order to have final presentation to the stakeholders and its adoption by the RNM Government. 41. The draft Law foresees the establishment of 4 REHA centers which are necessary for the purpose of rehabilitation and preparation of persons with disabilities for the open labor market and introduction of the mandatory quota for employers to employ persons with disabilities. The SIAP project is expected to support the necessary establishment and basic capacity building in REHA centers. REHA pilot in Topansko Pole with UNDP's and Swiss Development Agency's assistance in 2019 was initiated by a Letter of Acceptance between MLSP and AVRM of November 22, 2018, approved by the Government. In the near future, the Ministry of Labor and Social Policy is expected to propose to the Government a decision to determine the 3 spatial locations (already existing spaces) in which the REHA centers will operate. Government Decision on REHA location is a prerequisite for investment in REHA ceners, while a related update of the POM in form and substance acceptable to the Bank to include the criteria and procedures for the identification and selection of REHA Centers based on the Government Decision or other applicable legal framework establishing REHA Centers a condition for disbursing funds for this activity. The World Bank Social Insurance Administration Project (P170343) The activities that will follow include the renovation of the spatial conditions (internal renovation), procurement of appropriate equipment, development of standards and methodology for rehabilitation and training of employees. These activities are scheduled to be implemented during 2023, and in parallel during this period it is expected that the formal adoption of the Law on Employment of Persons with Disabilities will be completed, so that in 2024 there will be a fully established and functional system for employment of persons with disabilities. 42. With the requested extension of the SIAP project for an additional 20 months, the adoption of the foreseen Laws and by-laws is not a constraint despite the complex situation in the parliament. As explained above, the formal adoption of the Laws in the Parliament does not limit the implementation of the planned activities in the SIAP project (which require additional time). A two-year period is sufficient for the adoption of the regulation, so that the systems are fully functional after the completion of the activities foreseen under the SIAP. 43. Table below summarizes the list of activities for strengthening the legal framework. Table 7: List of Activities on Strengthening the Framework for Employment of Persons with Disabilities The World Bank Social Insurance Administration Project (P170343) The World Bank Social Insurance Administration Project (P170343) E. Reallocation between Disbursement Categories The restructuring will also result in a new disbursement category for Part 2.4. of the Loan Agreement for the Project, as provided in the withdrawal schedule of the proposed Loan Amendment. Part 2.4 refers to the provision of support for the development of the REHA Centers (new activity under Component 2) through: (a) carrying out works to renovate facilities for selected REHA Centers; (b) purchasing of the required information and communication technology and office equipment to be installed within the selected REHA Centers; and (c) technical assistance to develop new business standards and procedures, as well as training programs relevant staff of selected REHA Centers.” This will trigger a respective reallocation between disbursement categories. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Legal Covenants ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ The World Bank Social Insurance Administration Project (P170343) Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Improving the quality of the Improving the quality of the social insurance administration 9.81 No Change social insurance administration 9.81 services services Strengthen the regulatory Strengthen the regulatory framework for people with framework for people with 4.62 Revised 4.62 disabilities and for hazardous disabilities and for hazardous occupations occupations Project Management 0.71 No Change Project Management 0.71 TOTAL 15.14 15.14 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-90360 Effective 30-Apr-2023 31-Dec-2024 30-Apr-2025 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed The World Bank Social Insurance Administration Project (P170343) IBRD-90360-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: G,W, non-CS,CS,TR,OC 13,765,500.00 321,117.51 12,365,500.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: Int. rate cap or collar premium 0.00 0.00 0.00 iLap Category Sequence No: FEF Current Expenditure Category: FRONT END FEE 34,500.00 34,500.00 34,500.00 iLap Category Sequence No: 2 Current Expenditure Category: G, W, non-CS, CS, TR OC for Part 2.4 0.00 0.00 1,400,000.00 100 Total 13,800,000.00 355,617.51 13,800,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2020 263,198.00 1,098,500.00 2021 1,727,877.68 0.00 2022 3,776,635.36 0.00 2023 7,250,360.00 2,520,000.00 2024 1,572,907.92 8,000,000.00 2025 0.00 3,521,500.00 OPS_DETAILEDCHANGES_LEGCOV_TABLE LEGAL COVENANTS Loan/Credit/TF Description Status Action The World Bank Social Insurance Administration Project (P170343) Section III.B.1 of Schedule 2 to the Loan Agreement: No withdrawal shall be made (b) under Category (2), until and unless the Borrower has updated the POM in form and substance IBRD-90360 acceptable to the Bank to include the criteria and Expected soon New procedures for the identification and selection of REHA Centers based on the Borrower’s applicable legal framework establishing REHA Centers and defining their . location. The World Bank Social Insurance Administration Project (P170343) . Results framework COUNTRY: North Macedonia Social Insurance Administration Project Project Development Objectives(s) Improve the quality of services in administering social insurance and strengthen the regulatory framework for people with disabilities and hazardous occupations. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 Improve the quality of services in administering social insurance Single unified registry of socially insured Other national legislation Specialized legislation on SURS individuals developed and functional Inexistent harmonized with the special SURS established and operational. adopted. (Text) legislation on SURS as required. Rationale: Action: This indicator has been Revised Revised end target date. Proportion of insured population whose social insurance information is centrally 40.00 40.00 50.00 100.00 available to all social insurance agencies. (Percentage) Rationale: Action: This indicator has been Revised Revised end target date. Strengthen the regulatory framework for people with disabilities and hazardous occupations Proportion of multiple disability benefit 0.00 0.00 0.00 100.00 beneficiaries under 26 years undertaking The World Bank Social Insurance Administration Project (P170343) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 single disability certification through established CDCCU using unified methodology for disability assessment (Percentage) Rationale: Action: This indicator has been Revised Revised to unify the disability assessment process to cohorts below 26 years of age. Average time to issue a disability More than 120 days More than 120 days 60 days certificate (Text) Rationale: Rely on data on disability certifications for youth below the age of 26 in measuring the average time to issue a disability certificate. For other Action: This indicator has been Revised disability groups the reduction of the average time to issue a disability certificate would be recorded in the first years of implementation of the CDCCU, i.e. from 2025 onwards PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Component 1. Strengthening the efficiency of pension and social insurance administration Percentage of centrally maintained records of socially insured 40.00 50.00 100.00 individuals shared by all social insurance agencies (Percentage) Action: This indicator has been Revised The World Bank Social Insurance Administration Project (P170343) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Average time to transfer second pillar funds to individual accounts 5 days 5 days Below 3 days (Text) Action: This indicator has been Revised Staffing of the actuarial Actuarial department in department underway. PIONM staffed. Training Selected functionalities of PIOM Actuarial department not Actuarial department fully Training programs for staff in programs for staff in improved (Text) operational. staffed and operational. actuarial and analytical actuarial and analytical department developed department conducted Action: This indicator has been Revised Proportion of individual pension service and earnings records in 50.00 95.00 PIOM that are consolidated (Percentage) Rationale: Revised to clarify and update this intermediate indicator. This indicator measures the progress in consolidating the archive of "missing M4" forms in Action: This indicator has been individual work histories. As the initial value of 50% shows, there are many records with some missing data issues. While the end target – 95% Revised consolidated records remain unchanged, the intermediate targets have been removed. Component 2. Supporting the Implementation of Pension and Disability System Reforms Public awareness on employment of persons with disabilities raised 0 inquiries 2,500 inquiries 5,000 inquiries 10,000 inquiries (Text) Action: This indicator has been Rationale: Marked for Deletion The World Bank Social Insurance Administration Project (P170343) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Deleted due to inconsistency. This indicator was designed to measure the outreach of the Central National Registry of Persons with Disabilities by number of inquiries through various means of communication (including e-inquiries, phone calls, and emails). Another intermediate indicator, however, measures the effectiveness of establishing the Registry with end target of "Registry fully functional and operational". As the inquiries to Registry cannot be monitored prior to its full functionality, the indicator is being deleted. Current law mainly treats Law on Employment of Persons Reform options discussed employment through New law drafted New law passed/enacted New law passed/enacted. with Disabilities enacted (Text) and a new law drafted. sheltered companies. Action: This indicator has been Revised List of jobs declared as hazardous and arduous (Extended Service ESP list revised and enacted ESP list not revised ESP list under revision ESP list under revision. ESP list revised Period /ESP/ list) revised and (through pension legislation) enacted (Text) Action: This indicator has been Revised Enacted unified methodology for Unified methodology Unified methodology under Unified methodology disability assessment and Unified methodology enacted inexistent preparation designed determination (Text) Rationale: Action: This indicator has been Updated the intermediary targets. Revised CDCCU legally institutionally Central coordination unit for established in MLSP CDCCU under operative CDCCU fully functional and unified disability assessment Inexistent (Through the CDCCU Law the development operational. (CDCCU) functional (Text) legal statute and competencies established). The World Bank Social Insurance Administration Project (P170343) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Rationale: Action: This indicator has been Updated the intermediary targets. Revised Single registry of persons with Design of the single registry Single registry under Registry fully functional and disabilities developed and Inexistent underway development operational. functional (Text) Action: This indicator has been Revised Percentage of persons who had check-ups as part of their disability assessments, out of those who 60.00 90.00 were issued disability certificates during the previous month (Percentage) Rationale: Deleted. The indicator was designed to monitor the increase the number of check-ups, particularly the applicants for third-party care, that would result Action: This indicator has been from freeing the resources of the unified disability assessment process. As such results could be achieved only with operational CDCCU and operating Marked for Deletion period showing the performance. Percentage of persons assessed outside Skopje (out of those residing outside Skopje), who were 10.00 40.00 issued disability certificates or formal rejection decisions in the previous month (Percentage) Rationale: Action: This indicator has been Deleted. The goal was to measure the decentralization of disability assessment countrywide, but that would be observed only few years after the Marked for Deletion CDCCU's regional structure becomes operational. The World Bank Social Insurance Administration Project (P170343) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Centers for professional rehabilitation of persons with 1.00 4.00 disabilities developed (Number) Rationale: Indicator measures the progress in development of centers to support employment of persons with disabilities through preparing and equipping them Action: This indicator is New ("rehabilitating") for the labor market. Component 3: Project Management Share of beneficiaries satisfied with responsiveness of the grievance 0.00 20.00 30.00 40.00 50.00 redress mechanism (Percentage) Action: This indicator has been Revised Communication campaigns developed and implemented 0.00 3.00 (SURS, CDCCU, disability employment) (Number) Action: This indicator has been Revised Share of citizen engagement activities, which result in inputs 0.00 33.00 incorporated in the project design. (Percentage) Action: This indicator has been Revised The World Bank Social Insurance Administration Project (P170343) IO Table SPACE The World Bank Social Insurance Administration Project (P170343)